Cmon & all, some thoughts of mine on the above.
Agree, if a commodity price falls and all stocks exposed to that commodity price falls I think it reasonable to assume that the major reason for the fall is commodity price. I would add that if the company has cash and are managing their risk they do not need brokers therefore their SP will not be supported by Financier's pumping the price to raise funds. The brokers don't care about the S/H's imo and are there to make a quick buck. Therefore volume dries up and sentiment will then do the rest as people move their money to more liquid and popular stocks. This imo is common sense as individuals manage their investments and does not always reflect on mgt but on the individuals circumstance and risk/return/LT/ST priorities.
Re other companies, there are many at different stages of the oil cycle, My interest is more in those that cross the small window when explorer turns producer. That imo creates opportunity because often LT SH's become frustrated & impatient and are easily distracted. This gives time to do the homework and once the results are predictable it is easier to quantify a risk/reward. An intangible benefit is knowledge gained for LT and ideally the information gathered supports better all round decisions. By the time I retire I hope this knowledge and hobby will give me something to do when the kids ditch me.
1. The great Ayrton Senna once said "If you no longer go for a gap that exists, you are no longer a racing driver"
Ayrton Senna Quote. This imo equally applies to Junior explorers, that is the attraction (Good and Bad). At the time of that spend I was concentrating on EV for my selection and decided the MC/EV did not meet my criteria. Those that stayed decided it did meet their criteria. - Not much more to be said imo, mgt had a good go and unfortunately the results did not meet expectations. The commercial risk was low however as the land sale paid for it and for all we know the high price received may have included some in-house exploration work done.
2. Hedging agree it would be nice to have more but many companies don't hedge at all and focus on low production costs to protect earnings. SSN has imo enough hedging/prodn to manage and cover their fixed costs and have to date effectively realized the hedges to give best advantage and manage the dips. On costs using the newer NSA reserve report and asset carrying value I get Amortisation rate of $15.33, Also from sept qtrly Production costs $15.90 and G&A $15.54 giving all up cost $49.77/boe and cash cost $34,44. I suspect that may get better as the cost savings and efficiencies kick in but just my guess atm. Agree 10q will help on this.
3. 100% agree. Current EV is based on about $35k per boe imo, there is little value attributed to the other leaseholdings so if market sentiment improves or a clearer confidence in the NS operations is achieved then I expect the multiple to improve but this may take time due to overall sentiment.
Lastly on the RBL a risk now is the uncertainty provided by the shareholders. Whilst mgt were drilling and successfully completing infill wells and negotiating the facility shareholders took the first strike and now they have delivered a cash positive quarter and 2nd reserve report they take another swipe.
On decline YOY production should increase so if they can produce less now and cover fixed costs both Earnings and Reserves will increase over time if there is an improvement in the OP. Also as costs have decreased and if that continues then imo NPV will also increase in time. There appears on the results no need to take to much drilling risk in this FY as the production is in place but if opportunity exists and can be self funded whilst managing risk then a good idea imo. Planning for 2017 also appears in place but I guess there's a lot of water to flow under the bridge until then.
All my opinion only
Cheers
